why this report - next forecast this report why us, why this partnership, and next: the natural...

Why This ReportWhy Us, Why This ParTnershiP, and

NEXT: THE NATURAL PRODUCTS

INDUSTRY FORECAST 2014 IS A

JOINT VENTURE BETWEEN NUTRITION

BUSINESS JOURNAL (NBJ) AND

STERLING-RICE GROUP (SRG).

NBJ and SRG partnered on this strategic

report because both companies have

important stakes in the natural, organic,

and healthy products market. The project

team included researchers, strategists,

designers, writers, trend-spotters, and editors

from both organizations who collectively

synthesized and analyzed the results to

produce this report, which is the premier

guide to where the natural products market

is now—and where it is headed. NEXT

identifies the products, people, and macro

forces that will shape and create the greatest

opportunities for tomorrow. In addition, this

report is intended to get you thinking about

where the natural products industry could

go, the implications the industry will have

for mainstream CPG companies, and the

problems it could potentially help solve.

NBJ is the leading market research and publishing

firm in the natural products marketplace and has

been tracking the industry since 1996. NBJ’s parent

company, New Hope Natural Media, is the founder

and operator of Natural Products Expo East, Natural

Products Expo West, Organic Summit, NBJ Summit,

and other events targeted to the natural, organic,

and healthy products market. Along with NBJ,

New Hope publishes Natural Foods Merchandiser,

Functional Ingredients, and Delicious Living and is

the company behind newhope360.com, a leading

digital information resource for the natural, organic,

and healthy products market. Based in Boulder,

Colorado, New Hope also provides high-level

custom research and proprietary market intelligence

and strategy work.

To learn more about New Hope Natural Media, visit newhope360.com or call Dave Kingsbury or Tara Burkley at 303.939.8440.

© 2013 New Hope Natural Media and Sterling-Rice Group. All rights reserved. Duplication or redistribution is prohibited. All content contained herein is the property of the authors and featured brands.

SRG is a Boulder, Colorado-based integrated

strategy and creativity firm that works with many of

the greatest brands around the globe. The firm grew

up in the natural and organic world nearly 30 years

ago and continues to work with industry pioneers

and innovators on its central focus in health and

wellness—food, beverage, personal and home care,

dietary supplements, and ingredients. With a deep

bench of culinary expertise, SRG has counseled

and supported many of the leaders in the natural

products industry as well as seven of the top 12

food manufacturers in the country.

To learn more about Sterling-Rice Group, visit srg.com or call Rick Sterling or John Grubb at 303.381.6400.

FOOds &BeVeraGes

sUPPLeMenTs

naTUraLLiVinG

1/ eXeCUTiVe sUMMary 4

3/ desiGn Trends 2

4/ neXTy nOMinees + Winners 10

5/ COnTriBUTOrs + aCknOWLedGeMenTs 16

2/ ChaPTers 301

TABLEOFCONTENTS

1/ eXeCUTiVe sUMMary

eXeCUTiVe sUMMaryneXT

10 MACRO FORCES SHAPING TODAY + TOMORROW

If you don’t believe the world is changing dramatically

and rapidly, then you’re probably not paying enough

attention. The natural products industry is now

positioned as a leading crucible through which we can

watch the world unravel at its edges and rebuild itself

anew. But it’s not the only one. Movements within the

food world toward simple, clean, sustainable sourcing

of real, whole, safe ingredients present secular change

that’s grown infectious at most every level of society and

commerce. The old ways of doing business bear little

relevance to the new ways, and this forecast seeks to

open a few doors and turn on a few lights inside your

strategic mind as you approach that uncertain future.

The future of food looks a lot like natural products, and

the future of natural products looks a lot like the food we

ate 100 years ago. But it’s not that simple. We now carry

with us the insights, technologies, great successes, and

terrific damages wrought over the past century, and

tomorrow’s yesterday is the type of world companies will

spend millions of dollars and millions of manhours trying

to decipher. There’s no easy answer, and so this forecast

presents many answers to help you navigate that terrain.

Change, particularly at the rate it is occurring now,

can be unsettling. Fortunately, however, the trends are

pointing in the right direction, and all you need to do is

get onboard. Be sustainable. Be good. Promote health.

Let us help you get there.

Tomorrow’s YesTerdaY: A ROAD MAP FOR THE FUTURE OF THE NATURAL PRODUCTS INDUSTRY

eXeCUTiVe sUMMary

3anCienT WisdOM

MACRO FORCE #3

10 MACRO FORCES SHAPING TODAY + TOMORROWanCienT WisdOM

EXECUTIVE SUMMARY 11

When systems promote excessivity, they become unsustainable. When systems become

unsustainable, they break down. They then have to revert

to find safer ground, a process known in nature as the

“renewal cycle.” This is how the ecological world and its

species adapt and evolve. Welcome to the renewal cycle

for American business, now disrupting your best laid plans

with nary a concern. We are evolving as consumers into a

new food world, one with much of the shape and color of a

world just three generations removed, before the advent of

modern food science.

Our food future looks a lot like our past. Listen to Michael

Pollan on Good Morning America: “The conversation of

culture—which is to say the wisdom of your mother and your

grandmother and your great-grandmother—has more to

teach us about how to eat well than all the scientific studies

in the world so far.” And Tom Aarts of Nutrition Business

Advisors: “This entire supplements industry is based on raw

materials that are processed and engineered. Ingredients

get powdered, extracted, manipulated. We add excipients,

magnesium stearate, and binders. We stick it all in a pill or

softgels with gelatin from bovine sources. All this stuff that we

do to get nutrients in our bodies is not necessarily the best

way for our bodies to receive them.”

The movements in food toward raw, vegetarian and vegan,

paleo and ancient grains, these are reversions in search

of simpler, cleaner products. They are nostalgic efforts to

navigate the grocery store and cook a safe, nutritious meal

for our children. So are backyard chicken coops and rooftop

gardens. At sufficient scale, these trends might also become

directly competitive, if not antithetical, to large, established

industries with decades of proven success—industries

like functional foods and supplements—that now need to

refashion their proposition or risk falling tragically off-trend.

Evidence of tomorrow’s yesterday—looking back to revert in

forward-thinking ways—exists across the natural products

world. Brad’s Raw Foods caught our eye at Natural Products

Expo West with its raw snacks featuring kale and flax.

Vitamix—85 years old by the way—is now enjoying

a resurgence among lifestyle shoppers thanks to its

anCienT WisdOM in aCTiOn

FB16 The Wholegrarian Revolution

SP26 Mother Nature Takes on Bioengineering

NL16 Toxic Overload

whole-food approach to liquid nutrition. Standard

Process—not to be outdone at 117 years of age—won

a Nutrition Business Journal achievement award for its

longstanding commitment to organic farming. The

company has now supplied pill-poppers with upwards

of 6.5 million pounds of organic produce and serves as a

bastion for the supplement industry’s ability to migrate away

from trans-this-or-that toward whole foods. The list goes on,

but the trend is the same. Some of those old faces in natural

products—here’s looking at you, Bob’s Red Mill—suddenly

look brand-new again. The new faces kind of want to look

like the older ones, too.

As we selectively re-examine the advances proffered by

modern food science, pillars of the established industry

will come under serious and sudden attack. Widespread

pesticides like 2,4-D and glyphosate no longer have that

history-of-use on their side. Same goes for artificial colors

and flavors, pink slime, and any number of mainstays in the

world of food additives. The renewing system in search of

adaptive evolution is much bigger than any single trend,

industry, or company.

Here’s a useful rubric to bake into your business strategy from

now on: X percent of the next 20 years will be spent undoing

the past 50. Solve for X. Now consider your business and

reposition accordingly. As you consider, here’s a hint: X is

greater than zero, less than 100, and it’s a growing number.

Our food future looks a lot like our past.

How is your organization attempting to“revert in forward-thinking ways”?

FOOds &BeVeraGes COnTenTs FB FOODS & BEVERAGES

4 Bottom Line

FB CATEGORY NOW

10 Overview

FB CATEGORY NOW

15 Trends

FB WHAT’S NEXT

30 Forecast

FB WHAT’S NEXT

34 Emerging Opportunities

FB

50 End Notes

2014

FB23FB27

FB7

FB40

FB35

FB20

NOW CATEGORY BOTTOM LINE6FB

INFLUENCER

The OrGaniC FarMer

As Americans have become more distrustful of industrialized

food, we’ve put more value in knowing where our food

comes from and how it was produced. Wanting to put

a face to food production has helped to raise farmers—

particularly local organic farmers—to near rock-star status

with a growing number of consumers. Organic farmers are

authentic. Organic farmers are the good guys (and gals)

who want to help us return to a healthier, more sustainable

way of eating while building stronger communities.

3

OrGaniC FarMer inFLUenCe in aCTiOn

INFLUENCER

Authenticity may be in the eye of the beholder, but it’s

pretty difficult to be viewed as authentic if you’re hiding

behind hyperbolic product claims, flashy but meaningless

marketing, or the many forms of “label washing” that exist

today: green-washing, natural-washing, health-washing…

the list is growing. Such smoke-and-mirrors messaging

may have worked in the past, but consumers are becoming

increasingly wise to it. So, you might as well be transparent,

honest, and good—because the world will know the real

you soon enough if you’re not.

4aUThenTiCiTy

aUThenTiCiTy inFLUenCe in aCTiOn

FB24 Organic Valley

FB25 Shelton’s Market Garden

FB45 One Degree Organic Foods

FB29 Lotus Foods

FB35 Manitoba Harvest

FB47 Upton’s Naturals

NOW CATEGORY BOTTOM LINE 7FB

INFLUENCER

MiLLenniaLs

The face of the U.S. marketplace—and of the people who

buy natural products—is rapidly changing. Baby boomers

are still important, but an even larger demographic group—

millennials—is rising to prominence. Although the 50 million

Americans between the ages of 18 and 32 currently lack the

spending power of their parents and are less persuaded by

marketing, they have much greater affinity for natural and

organic, are starting their own families, and are changing

the way companies approach branding.

5

MiLLenniaLs inFLUenCe in aCTiOn

INFLUENCER

Do your products contain inputs you’d rather not promote

to shoppers? Is your company the target of false advertising

lawsuits you’d like to keep quiet? Would you rather

consumers not know where you source your ingredients? If

so, good luck. Such secrets are a thing of the past, thanks

to the unprecedented amount of information about your

and other companies people can now access via Google,

social networks, and the growing number of shopping

apps that force transparency with the scan of a product

bar code.

6inFOrMaTiOn and TeChnOLOGy

i+T inFLUenCe in aCTiOn

FB43 ’Tude Juice

FB17 Dang Coconut Chips

FB47 Beyond Meat

FB23 Consumr

FB23 Fooducate

FB25 BrightFarms

2008 2009

$19.0

2010 2011 2012

$21.6$19.9

$23.7$26.3

U.S. Organic Food and Beverage Salesand Growth: 2008–2012

10%breads + grains

3%meat + fish + poultry

12%beverages

5%snack foods

12%packaged + prepared foods

37%fruit + vegetables

17%dairy

4%condiments

2012 U.S. Organic Food and Beverage Salesby Product Category

$30B

$0

12.5% 6.5% 9.0%CHANNEL retail-NHF internet retail-MM other

CAGR 6.3%

U.S. Organic Food and Beverage Sales and Growthby Channel: 2008–2012

2008

2009

2010

2011

2012

18%

14%

10%

6%

2%

$0.5B $1.1B

$0.6B $1.2B

$0.7B $1.3B

$0.8B $1.5B

$8.6B $8.9B

$9.1B $9.1B

$9.8B $9.8B

$10.5B $11.0B

$0.9B $1.7B$11.6B $12.1B $26.3B

$19.9B

$19.0B

$21.6B

$23.7B

sales % growth

SALES GROWTH vs. YAG

ORGANICBRUISED BUT NOT BEATENOrganic: It’s worth it—or so the Organic Trade

Association’s recent campaign says. But are

consumers buying the message? Yes—and no.

U.S. consumer sales of certified organic foods and

beverages jumped nearly 10 percent to

$28.2 billion in 2012.10 Although this is impressive,

this growth—particularly following the beating

organic took during the heart of the recession—

still pales in comparison to the almost 18 percent

expansion rates the organic category achieved

five years ago.11

Also, as many companies and retailers have learned,

consumer loyalty is hard to gain these days through

USDA Organic certification alone. With the exception

of single-ingredient items (such as Earthbound

Farm’s frozen fruit and vegetable line), many new

packaged and prepared foods emphasize other key

attributes—or go “beyond organic” with ingredient

standards—to appeal to consumers. Compared

with qualities such as local or vegan, USDA Organic

holds less emotional appeal as a lifestyle choice

because of the certification’s complexity and,

ironically, because of its own success. Organic

is now a big business, and some core natural

consumers distrust that.

Contributing to organic’s current problems is a deep

misunderstanding of the many benefits delivered

through organic certification. This was painfully

demonstrated by the 2012 Stanford University study,

which spurred media buzz with its conclusion that

organic is not more nutritious than conventionally

grown food.12 What the flawed study missed, of

course, is analysis of the many other health and

environmental benefits of organic agriculture. Such

studies hurt organic because of its price point

(organic is typically more expensive, but for very

good reasons13) and the lack of comprehensive

consumer education. Organic is worth it, in our

opinion, but the average American still doesn’t

understand why. It’s up to organic companies,

farmers, and supporters to tell a unified story to

consumers about the benefits of organic and why it

matters as a starting point for healthy products.

FB CaTeGOry nOW Trends

IMPACT TODAYLOW HIGH

IMPA

CT T

OMOR

ROW

HIGH

SHAPING THE NATURAL, ORGANIC, AND FUNCTIONAL FOOD AND BEVERAGE CATEGORY

7 TRENDS

HEALTHY TASTES GOODWHOLEGRARIAN

LOCAL

SIZE OF CIRCLE = SCOPE OF IMPUTED RELATIVE IMPACT

VILLAINS

TRANSPARENCY

ON A MISSION

ORGANIC

WHAT’S NEXT EMERGING OPPORTUNITIES35FB

PRODUCTS

A NATURAL BOOST

saMBazOn enerGy MOCha JaVa

This blended energy drink offers a natural boost using whole-food ingredients, including açaí, yerba maté, fair-trade coffee, and green tea extract. It’s also Non-GMO Project Verified, Certified B Corp, certified organic and vegan—proving it has nothing to hide.

CURRYING FAVOR

TUMeriC aLiVe

SEEDING SALES

ManiTOBa harVesT

Manitoba Harvest is one company leading the charge in moving hemp seeds beyond their use in protein powders to being added as a whole- food-based functionality booster for foods and beverages. The company’s Hemp Hearts, for example, are positioned as easy add-on nutrition for people looking to eat simply and clean.

Learn MOre aBOUT This OPPOrTUniTyTRENDS

FB16 The Wholegrarian Revolution

FB20 Beware! Food Villains are Everywhere

FB22 Transparency Rules

naTUraLLy FUnCTiOnaL

Turmeric was a hot spice at the show, but no food or beverage company leveraged its anti-inflammatory properties better than Tumeric Alive. Dubbed “yoga in a bottle,” Tumeric Alive combines turmeric with Ayurvedic ingredients, such as ginger, cardamom, lemon, and spearmint. Sweetened only with honey, agave, or coconut nectar, depending on the flavor. The result is a spicy sipper that invigorates—worthy for a post-Bikram refresh. We’re loving the front-of-package ingredient list as well.

Positioned to meet this shift in consumer preference are

numerous emerging beverages that deliver sustainable energy

through whole-food-based nutrients rather than through

caffeine, taurine, and engineered ingredient blends. We’re

even seeing new natural energy products positioned for the

conventional market. Case in point: The Campbell Soup Co.

launched a line of V8-V Fusion Energy Drinks and V8 Energy

Shots made with “ingredients people and know and trust” to

provide a “natural energy boost.”5 Guess who Campbell is

targeting with the product? Women and people 35 and older

who traditionally have rejected the energy drink category.

CURRYING FAVORCould an ancient herb be the antidote to the aches and

pains we all experience as we get older? According to

a surge of recent research, the answer could be yes. Of

more than 1,000 studies published in 2012 on curcumin,

a healing compound found in turmeric, many showed that

regular consumption could improve chronic degenerative

disease states brought on by inflammation.6 Of course, the

fact that turmeric has been used for centuries in Ayurvedic

and Chinese medicine to treat everything from joint aches to

sprains and liver disorders, only bolsters its credibility. While

curcumin can be taken in supplement form, the good news

for food manufactures is this functional ingredient actually

also tastes delicious. American consumers have already

grown accustomed to eating turmeric in Indian curries so

there’s no need to mask its smoky flavor.7

Additionally, as the American population ages (by 2030,

20 percent of us will be 65 or older) more consumers are

looking for preventative solutions to manage health and avoid

doctors bills. Turmeric’s inherent benefits are sure to capture

the attention of the wholegrarian consumer looking for natural

remedies to ease aging pains—at least, that’s what innovative

food manufacturers are counting on. At Natural Products

Expo West 2013, turmeric was the star ingredient in a handful

of new beverages, including a line of herbal infusions from

Zingiwell that utilizes Java turmeric to support wellness. The

San Marino, Calif.-based brand also offers a potent turmeric-

curcumin shot to boost immunity and add “zing to your life.”

Turmeric-fortified foods may not be the fountain of youth, but

at this point they may just be the next best thing.

WHAT’S NEXT EMERGING OPPORTUNITIES 47FB

PRODUCTS

These raw, organic, local-ingredient krauts and kimchis use an old-school process to create kicky flavors like Ginger Beet and Spicy Wakame Ginger. Even cooler: The raw, fermented foods are packaged in a BPA-free pouch that has a small valve to let out the naturally occurring gases without introducing oxygen—the first such fermented-food package innovation in the U.S.

Upton’s packaging may get graphic inspiration from old-town butcher shops, but their products are far from meaty. Their delicious varieties of seitan stand out from the rest, just like their packaging. We love their brown butcher paper and hand-drawn graphics paired with the quirky mustaches.


FB18 Healthy Tastes Good at Last

FB22 Transparency Rules

FB28 Brands on a Mission

UnaBashed aUThenTiCiTy

You don’t have to be meat-free to get behind Beyond Meat. More than a surprisingly convincing chicken substitute, which has built a loyal following among vegans and vegetarians, the company was founded to improve consumers’ health, impact climate change,

conserve natural resources, and respect animal welfare. It was recently featured in Bill Gates’s new documentary on the future of food.

RAW BRANDING

FarMhOUse CULTUre

EMBRACE WHO YOU ARE

UPTOn’s naTUraLs

CREATE AN EMOTIONAL CONNECTION

BeyOnd MeaT

Millennials, the 50 million Americans between the ages of

18 and 32, are particularly attracted to such branding. It’s

often said that millennials don’t gravitate to brands, but

that’s not really accurate. It’s true that millennials aren’t

typically attracted to or influenced by colossal brands the

way their parents are, but these younger consumers do seek

out brands that convey authenticity and make them happy.38

When millennials want to interact with brands, they do so

via social media. One recent study found that 53 percent

of millennials use Facebook and other social networks to

explore and learn about brands. In comparison, only

37 percent of non-millennials do the same.39 Innovative

brands understand this and are successfully using social

media to demonstrate their product benefits and company

values to build loyalty, especially with younger consumers.

CREATE AN EMOTIONAL CONNECTIONRevelry Brand’s founder and CEO Brendan Synnott recently

sent a letter to his investment partners and friends detailing

the evolution he’s seeing in consumer values and behaviors40

and how these changes affect how natural products

companies should interact with consumers. We cite this

letter because we believe it addresses crucial points related

to natural food branding and authenticity. As Synnott notes,

consumers (particularly core natural products consumers) no

longer make product purchasing decisions solely on practical

needs or “personal gratification, disregarding long-term or

external implications,” Synnott writes. “Consumption is driven

by a sense of collaboration, connection, and empowerment

that often weighs environmental or societal implications as

heavily as personal need.”

If companies want to converse with this next generation of

conscious consumers, they must foster a similar evolution

within their organizations. Producing a best-in-class food or

other product is still a must—but it isn’t enough. Companies

must also be driven by strong values, a clear mission, and

the willingness to communicate openly and honestly with

the marketplace. Revelry Brands is working to help Siggi’s

Yogurt, Evol, Pact, and the other companies it has invested in

to follow this approach to consumer engagement. As Synnott

says, staying in tune with the evolving consumer will do more

than just grow sales—it is also going to help save the planet.

WHAT’S NEXT CATEGORY FORECAST48FB

TasTe

sPrOUTed

FerMenTed

PrOTein

raW

VeGan

nOn-GMO

FiBersUGar

sOy

GLUTen-Free

PaLeO

naTUraL

Fair Trade

OrGaniC CerTiFiCaTiOn

THE CATEGORY’SCHANGING VALUES

TraCkinG & PrediCTinG

sUPPLeMenTs COnTenTs SP DIETARY SUPPLEMENTS

4 Bottom Line

SP CATEGORY NOW

10 Overview

SP CATEGORY NOW

13 Trends

SP WHAT’S NEXT

28 Forecast

SP WHAT’S NEXT


SP

44 End Notes

2014

SP39

SP35

SP36

SP16SP19

SP20

SP32

sP dieTary sUPPLeMenTs Bottom Line

CaTeGOry BOTTOM Line

Supplements are seen as a necessary dietary

component for more than half of all Americans.

People turn to supplements to stay well or

ward off disease, because they are fearful of

prescription drugs, want help shedding a few

pounds, or are following the recommendation

of a celebrity physician on TV.

With $32 billion in 2012 sales, supplements

are becoming big business in the United

States—even though the category does still

pale in size to the $310 billion prescription

drug business. Although the supplement

industry remains lucrative and continues to

provide opportunities for many companies,

it also is wrought with challenges—some of

which are becoming increasingly significant.

If you’re in or evaluating the supplement

business, more than ever you need a map

because the path to the future is filled with

potential potholes, disastrous detours, and

seductive side roads that lead to nowhere.

To understand which way to go, you need to

follow those influencers that are setting the

course to tomorrow.

Here are nine influencers we think

are particularly impactful for the

supplement industry and 27 organizations,

products, or people connected to them.

WHAT AND WHO YOU NEED TO KNOW TODAY TO PLAN FOR TOMORROW

NOW CATEGORY BOTTOM LINE 5SP

INFLUENCER

dr. Oz

Mehmet Oz, MD, and his talk show recommendations send

consumers flocking to supplement aisles, often in search

of products many retailers have never heard of. Apple

pectin, andrographis, glucomannan, raspberry ketone, and

forskolin, among others, have all been subject to the “Dr.

Oz effect”—a bump that sends individual product sales into

the double and triple digits, if only for a brief interval. While

some bemoan Dr. Oz’s influence as dangerously faddish,

his focus on integrative medicine and holistic, natural

approaches add legitimacy to an oft-marginalized industry.

1

dr. Oz inFLUenCe in aCTiOn

SP17 Glucomannan

SP21 Green Coffee Bean

SP33 Healthy Directions

INFLUENCER

Since its inception, the supplement industry’s bread-and-

butter trend has been self-care. Nothing has propelled

growth in this market more than self-motivated consumers

taking an active interest in their long-term health. Trends

toward a growing distrust of pharmaceuticals and a long-

term focus on chronic disease prevention have pushed

consumers to natural alternatives for over half a century—

and have kept U.S. supplement sales growing in the mid-

single digits for the better part of the last decade. Now,

with healthcare costs spiraling out of control, it’s time for

everyone to get serious about prevention. Taking care of

oneself is no longer a choice but a necessity—and an

increasingly mandated one at that.

2The PreVenTiOn iMPeraTiVe

PreVenTiOn iMPeraTiVe inFLUenCe in aCTiOn

SP21 Innate Response Seasonal Therapeutics

SP31 Walgreens

SP31 ZocDoc

Glucomannan

GREEN COFFEEBEAN

NOW PRODUCT TRENDS 23SP

PRODUCTS

aMeriCan LiFesTyLe

WE ARE STRESSED

P.L. ThOMas zeMBrin

The first patented and clinically studied extract of sceletium tortuosum, an African herb used for stress relief and mood enhancement, Zembrin entered the U.S. market via P.L. Thomas in 2012. With solid science, an NDI notification, and centuries of use to its name, sceletium is bound to become a household herb.

WE NEED A BOOST—NOW!

ChrOMadeX PUrenerGy

Bonded with wonder-antioxidant pTeroPure, ChromaDex’s new caffeine ingredient PURENERGY offers a healthy boost of pterostilbene bonded with America’s favorite stimulant. Expect to see this new caffeine ingredient start to pop up in premium and natural energy drinks.

Learn MOre aBOUT This TrendEMERGING OPPORTUNITIES

SP30 The Prevention Imperative

SP34 Clean Performance

SP36 The Low-Hanging Fruit

WE CAN’T SLEEP

TWinLaB MeLaTOnin dOTs

Nobody likes a gargantuan tablet, especially before bedtime, but everyone could certainly use a good night’s sleep. Twinlab’s Melatonin Dots meet consumers in the middle, offering a small format with a solid dose of sleep-encouraging melatonin. Meeting your sleep requirements without an upset stomach—that’s a win-win.

WE CAN’T SLEEPWant a disturbing look at our nation’s dystopian present?

Take a gander at some chilling statistics from the National

Sleep Foundation’s 2011 Sleep in America Poll. Two-

thirds of Americans aged 13 to 64 say their sleep needs

are not being met each week. Sixty percent of us wake

up repeatedly, and 43 percent rarely or never get a good

night’s sleep on weeknights.21

And it’s not just all the caffeine, late nights, stress, anxiety,

and discomfort. Of all of the Sleep in America survey

participants, 95 percent use an electronic device a few nights

a week in the hour before bed. All this exposure to artificial

light suppresses the brain’s natural release of melatonin,

delaying our descent into sleep. Can anyone say melatonin

supplements? Yes. In 2011, U.S. sales of melatonin cracked

$200 million, growing over 25 percent.22

WE NEED A BOOST—NOW!As a functional health benefit, energy remains a highly

compelling proposition to consumers. In 2012, U.S. sales

of energy drinks rose 16 percent to $8.7 billion.23 Shots

saw diminished growth in 2012, climbing just 3 percent to

$1.7 billion. The market’s 800-pound gorilla —5-hour

Energy—seems to have finally reached the edges of its

bucket, though plenty of smaller companies are prepared

to vie for share of the market.

Both shots and drinks are finally feeling the strain of a major

caffeine controversy, which began in 2011 following the

death of 14-year-old Anais Fournier, who suffered a heart

attack after drinking two 24-ounce cans of Monster Energy.

In the first quarter of 2013, Monster reported sales growth

of just 7.3 percent, well below the 16.6 percent growth

recorded in the previous year’s quarter. According to CEO

Rodney Sacks, sales for the overall energy drink market

were below average that quarter, in part because of negative

publicity surrounding the space.

NOW PRODUCT TRENDS 27SP

PRODUCTS

MOTher naTUre Takes On BiOenGineerinG

VeGan WOrkOUT The market is moving away from artificial, “hulk guy” sports supplements. Vega explains how it is filling the void with its clean, vegan line of pre-, during, and post-workout products.www.nextforecast.com/vega1

DEFINING THE WHOLE-FOOD SUPPLEMENT MOVEMENT

aMeriCan heaLTh MOre Than a MULTiPLe

SUPPLEMENTING THE VEGAN LIFESTYLE

Garden OF LiFe raW PrOTein

Using a hodge-podge of plant proteins—rice, pea, hemp, cranberry seed, etc.—and the right messaging, Garden of Life’s Raw Protein hits all the right vegan buttons and has quickly become a leader in the meal supplement market.

The whole-food supplement category, a fast-growing segment desperately in need of a formalized definition, has its share of hangers-on. More Than A Multiple Whole Food Concentrates from American Health (an NBTY subsidiary) stretch the de facto definition somewhat by combining a “Whole Food Energy-Rich Complex” along with a standard suite of vitamins and minerals from synthetic sources. Not the strongest product but one that’s bound to sell.

ORGANIC VS. NON-GMO

UnPa

With Whole Foods Market’s announcement that all products it sells will require GMO labeling by 2018, many supplement sellers were left scratching their heads. The United Natural Products Alliance has teamed up with key manufacturers to help make the transition and clear up an opaque supply market typically run as a waste stream for ag companies.


34 Clean Performance

36 The Low-Hanging Fruit

38 A New Age for Nutritional Ingredients

ORGANIC VS. NON-GMOThe U.S. biotech industry has a lot to lose in the consumer

war with GMOs. And the biotech industry fuels much of the

ingredient innovation this industry so sorely needs. What’s

a chemist to do? And now that Whole Foods Market has

announced full GMO transparency on all products it sells

by 2018, the supplement industry better get moving on

naturalizing its supply chain.

It can be worthwhile for suppliers since finished products

are getting certified at an accelerated rate. Full lines from

Nordic Naturals, Rainbow Light, Natural Vitality, Flora,

NutriGold, and New Chapter are Non-GMO Project Verified,

while protein powders from Garden of Life, Nutiva, Manitoba

Harvest, and even hardcore sports nutrition company

Metabolic Response Modifiers all use the Non-GMO Project

seal as well. By comparison, certified-organic supplements

are a sleepier category, and despite new launches, non-

GMO may become more viable in the supplement space in

the near future. Organic adds new costs and complexities to

the manufacturing equation and targets a pretty small niche

of consumers, while non-GMO certification paints away the

“engineered” stigma with a broader stroke.

naTUraLLiVinG COnTenTs NL NATURAL LIVING

4 Bottom Line

NL CATEGORY NOW

10 Overview

NL CATEGORY NOW

15 Trends

NL WHAT’S NEXT

26 Forecast

NL WHAT’S NEXT


NL SPECIAL SECTION

42 Pets

NL

58 End Notes

2014

NL17 NL22

NL42

NL33NL35

NL38

nL CaTeGOry nOW Overview

The CaTeGOry

nOW

Personal Care

THE NATURAL BEAUTY TIPPING POINT

20092008 2010

$7.6

2011 2012

$8.2

$7.7

$8.7

$9.6


U.S. Natural and Organic Personal CareSales and Growth: 2008–2012

$10B

$0

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

% growthsales

NOW CATEGORY OVERVIEW 11NL

Thanks to increased awareness about toxic

ingredients1 and improved efficacy of natural beauty

products,2 Americans choosing cleaner foods are

also being more critical about their personal care

purchases. The natural and organic personal care

industry is now valued at $9.6 billion and saw a

9.8 percent boost in sales last year. Skin care, rife

with innovation, was the biggest contributor to sales

and experienced the most growth (11 percent). Also

experiencing double-digit growth were cosmetics,

bath and soap products, and natural fragrances.

But sales are just one way to gauge natural

beauty’s recent impact on the entire personal

care industry. Natural companies and consumer-

safety groups nudged Congress to finally meet on

cosmetics legislation3 last year and encouraged

self-regulation in the natural products industry,

such as Whole Foods Market’s organic labeling

policy4 and the Campaign for Safe Cosmetics’

Compact for Safe Cosmetics.5

Even the conventional cosmetics industry is

adjusting its practices: International powerhouses

Johnson & Johnson, Procter & Gamble, and

L’Oreal6 have rolled out sustainability initiatives that

touch on everything from plant-based sourcing to

decreasing animal testing and investing in green

chemistry. In theory, these efforts could make green

resources more available and cheaper for the entire

industry. But in light of the many limitations on

these corporate makeovers,7 are these corporations

NOW PRODUCT TRENDS 16NL

PRODUCTS

TOXiC OVerLOad


NL30 Putting Organic into Perspective

NL36 Beauty School

NL38 Go Green Chemistry

REFORMULATIONS BOOST CONSUMER CONFIDENCE

aUBrey

Reformulating to become a cleaner, safer product isn’t the only shift personal care manufacturers are making to boost credibility and improve their lines, as shown by industry veteran Aubrey’s recent skin care relaunch. Long dedicated to nontoxic products, Aubrey’s full lineup of updated SKUs is touted as being more targeted and more effective, with botanical ingredients aimed at specific skin types and issues, including aging, sensitive, and blemish-prone skin.

SEAL OF APPROVAL

VerMOnT sOaP Green GOLd OrGaniC herBaL MOisTUrizer

This down-home Vermont brand first made a name for itself with plant-based liquid soaps and detergents 20 years ago. It recently entered the beauty category with this ubersoothing USDA Organic salve that has an equally simple appeal for skin care purists. The green and white seal, along with the company’s years of experience mastering no-frills formulations, helps distinguish Green Gold, which uses only five ingredients: shea butter, hemp seed oil, calendula, St. John’s Wort, and rosemary.

We’ve seen a huge shift in public awareness and certainly pressure to regulate the [cosmetics] industry.”—Stacy Malkan, Campaign for Safe Cosmetics

“

LESS IS MORE

eVanheaLy The idea that just a few potent plant-based ingredients can support skin health has never seemed more relevant, and skin care company evanhealy’s “radical simplicity” concept proves it right. Products including moisturizers and tonics source organic ingredients—think lavender and green tea—from small farms in Washington and France. Add in the company’s homeopathic and Ayurvedic philosophies, and evanhealy supports a trifecta of health, wellness, and beauty.

SEAL OF APPROVALCertification saturation is the main source of confusion in the

personal care industry, but one seal continues to resonate

with consumers seeking pure products: USDA Organic.

The NSF/ANSI 305 “contains organic ingredients” label,

which was launched in 2010, is slowly gaining recognition as

well. But the food-based USDA Organic seal continues to be

the most commonly recognized and sought-after standard

in personal care products, most likely because consumers

relate it to their food purchases.5 Although it’s not easy for

personal care products to meet this standard, brands such

as Dr. Bronner’s, Nourish Organic Food for Healthy Skin,

and Intelligent Nutrients have led the crusade, proving it’s

possible and paving the way for other brands seeking this

organic seal.

WHAT’S NEXT EMERGING OPPORTUNITIES 31NL

BEYOND ORGANIC

inTeLLiGenT nUTrienTs

This brand from Aveda founder Horst Rechelbacher offers a vast selection of beauty and lifestyle products focused on organic and performance-driven bioactives. The line includes antiaging serums, supplements, home-purifying scents (or as Intelligent Nutrients calls them Air Nutrition), and pet products. Each features high-potency, certified-organic botanical blends in modern packaging.

PRODUCTS

NSF/ANSI’S HOUR

aVaLOn OrGaniCs

SAFETY TRUMPS CERTIFICATIONS

BeaUTy COUnTerNew skin care company Beauty Counter formulates with high safety standards and uses an intimate social-selling platform to spread that message. Its ingredient criteria are based entirely on health (it will not use any of the 1,300 chemical ingredients banned in the E.U., in addition to the 11 banned in the U.S.). Beauty

Counter puts all other ingredients through “The Screen” process, which evaluates each ingredient on skin irritation, carcinogenicity, reproductive toxicity, and cumulative exposure.

Rather than ditching organic from its labels in response to Whole Foods’ organic labeling requirements, Avalon Organics reformulated to get the NSF/ANSI 305 “contains organic ingredients” certification for each of its products and redesigned its packages to promote the seal. We think this move is good for Avalon and for the NSF/ANSI 305 certification.


NL18 Children: The Future of Natural Personal Care

NL20 Delivering Safety and Efficacy

NL22 Taking on Greenwashing

PUTTinG OrGaniCinTO PersPeCTiVeto ensure products are free from trace ingredients, such as

lead, which was recently found in 400 lipsticks.4

BEYOND ORGANICIt isn’t easy for natural personal care companies to become

USDA Organic. That’s why for a long time, consumers could

only find the seal on super-simple formulations like pure

oils, bar soap, and lotions made with just a few agricultural

ingredients. The reality is that for USDA Organic and NSF/

ANSI 305 certifications to thrive in the personal care

department, the labels must appear on various product

types and certified products must perform at a high level.

Fortunately, we’re now seeing the product diversity and

innovation necessary for organic personal care’s success.

Aubrey recently launched a USDA Organic hair spray

made with quinoa protein, an ingredient certified under NOP

standards. We expect to see even more unique organic

beauty ingredients now that USDA Organic products may

use European organic ingredients.

Proving that even high-performance skin care can also go

organic, Sophyto’s Tocotrienol Super Skin Concentrate

sports the NSF seal and Intelligent Nutrients and Acure

feature plant stem cells in USDA Organic products. This

ingredient will continue to thrive because, as Rechelbacher

notes, plant stem cells are 1,000 times more potent than

the whole plant, which you don’t have to kill to manufacture

the product. The challenge is getting the organic community

to understand that plant stem cells can be organic, even if

they’re cultivated in a lab, he says.

aVeda and inTeLLiGenT nUTrienTs Founder Horst Rechelbacher discusses the opportunities—and challenges—associated with manufacturing high-performance organic personal care products. www.nextforecast.com/intelnut1

NOW PRODUCT TRENDS 47NL

PRODUCTS

The hUManizaTiOn OF PeTs

A NATURAL SHIFT

“i and LOVe and yOU”


NL50 Prevention for Pets

NL52 Closer to the Source

LEAN-PROTEIN BOOST

WeLLness COre Grain-Free

EVEN FIDO HAS A SPECIAL DIET

kOda By keys OMeGaLiFe 369 VeGan OiL sUPPLeMenT

Vegan omega-3 oils are hot with humans; now they’ve made a splash in the pet space. Koda by Keys’ naturopathic dog remedies is a relatively new line from a company that has been around for nearly a decade in the natural skin care business. Among its first pet products is this supplement that caters to the vegan pooch (or at least to its vegan owner).

Natural products industry veteran Brendan Synnott, formerly of Bear Naked granola, recently launched this complete natural pet line, which takes natural pet products to the next level. Among its offerings are raw and dehydrated food, pet treats, grooming care, supplements, and flea and tick protection. Plus, the company’s mission is to “green up the pet industry” with sustainable business practices.

Wellness is staying on top of the grain-free pet food trend through its recent launch of a new line of CORE Grain-Free foods for cats and dogs. It’s not just the grain-free attribute that’s getting the well-known natural pet food company’s attention: Wellness also uses only lean proteins such as salmon and turkey in this new line.

EVEN FIDO HAS A SPECIAL DIETManufacturers are also shifting toward artisan treats

that cater to pets’ special dietary needs, a byproduct of

American consumers’ understanding of their food allergies.

Pet allergies to gluten, wheat, corn, and certain proteins like

chicken and beef are also on the rise.

Gluten-free was among the first claims on pet foods; but

more companies are now featuring grain-free and corn-free

products13 with vegetable carbohydrates. Most conventional

manufacturers even have lines with these claims. Brands

such as Max & Ruffy’s introduced highly controversial14

vegan dog treats. May & Ruffy’s offers flavors such as

Molasses Explosion 1919, Mother Quinoa’s Pumpkin Patch,

and Sweet Potato & Alfalfa.

Other companies creatively cater to the picky pet with

alternative pet-food deliveries. Puppy Dust is a wheat- and

corn-free powdered treat in Peanut Butter & Honey and

Bacon Cheddar Cheese meant for sprinkling atop food to

encourage pups to eat.

LEAN-PROTEIN BOOSTBecause protein is considerably more expensive than low-

quality carbs like corn, many mass-produced pet foods

pack in entirely too much cheap grain. As a result, many

dogs and cats get too many carbohydrates and not enough

protein from conventional packaged foods.

While dry extruded pet foods have typically included about

15 percent to 30 percent protein, natural brands such as

Freshpet and Whole Life include 80 percent or more protein

in fresh or freeze-dried products. And with functional

ingredients, even dry-extruded pet foods are bulking up on

protein. Glanbia Nutritionals’ OptiSol 9000 allows for the

inclusion of 50 percent or more meat in low-grain, high-

protein dry extruded pet diets.15

Lack of protein is one issue conventional products face;

protein quality and source are two more. Even many early

natural pet foods didn’t use hormone- and antibiotic-free

meats, allowing newer companies that focus on free-range

and organic proteins to really stand out. And because

pets can develop allergies to chicken and beef, unique

alternatives have entered the space: wild game, including

bison, venison, kangaroo, and duck; and fresh seafood,

such as cod and salmon.

“

U.S. Natural and Organic Household Sales and Growth: 2008–2012 | Forecast through 2018

$2.5$2.8$2.7

$3.1$3.6

$4.0

$5.0$4.5

$5.6$6.2

$6.8

2008 20102009 2011 2012* 2013 20152014 2016 2017 2018

$7B

$0

projected sales

sales

% growth

60%

50%

40%

30%

20%

10%

0%


*Preliminary sales estimate.

New ingredients, which satisfy green chemistry and are also from renewable plant-based raw materials, will drive the growth of the natural personal industry.”

—Kantha Shelke, principal, Corvus Blue LLC

Contributors + acknowledgements

STERLING-RICE

GROUP

daVe kinGsBUryVice President of New Product Development

CarLOTTa MasTEditor-in-Chief, newhope360.com

MarC BrUshEditor-in-Chief, Nutrition Business Journal

JessiCa rUBinOSenior Associate Editor

COnnOr Link Associate Editor, Nutrition Business Journal

CarLa OOyenDirector of Market Intelligence

NEW HOPE

NATURAL MEDIA

COnTriBUTOrs

JOhn GrUBBManaging Partner

JeFF CUrryCreative Director, Partner

Jen JOnesDirector of Design Strategy, Partner

BryCe CLarkSenior Marketing Analyst

OLiVia OMeGaSenior Account Manager

raChaeL harPSenior Art Director

THANK YOU

aCknOWLedGeMenTs

Many minds were involved in creating the NEXT Forecast

2014. The project team included researchers, strategists,

designers, writers, editors, trend-spotters, and branding

experts who collectively spent hundreds of hours producing

what we hope is a valuable report for you and your business.

STERLING-RICE GROUP WOULD LIKE TO THANKAl Banisch

Dave Barber

Bret Berman

Inke Borret

Dan Burak

Peter Heppner

Diana Hodges

Shawna Kinkead

Hilary Martin

Megan McKinley

Jon Nooning

Alexia Sites

neXT adVisOry BOard MeMBersJohn Anthony, Partner, White Road Investments

Cheryl Bottger, VP Sales & Product Development, Veria International

Stacey Egide, CEO, Andalou Naturals

Seth Goldman, Founder and CEO, Honest Tea

Janica Lane, Partner, Partnership Capital Growth

Julia Sabin, Vice President and General Manager, Smucker Natural

Brendan Synnott, Founder and CEO, Revelry Brands

Peter Wennström, President, HealthyMarketingTeam Ltd.

NEW HOPE NATURAL MEDIA WOULD LIKE TO THANKAdam Andersen

Kelsey Blackwell

Jenna Blumenfeld

Elisa Bosley

Tara Burkley

Heather Fried

James Johnson

Kim Johnson

Christine Kapperman

Dave Levine

Fred Linder

Erin Manning

Scott Owen

Gabe Ratliff

Todd Runestad

Scott Sherpe

Nora Simmons

Erica Stone

Laura Weldon

why this report - next forecast this report why us, why this partnership, and next: the natural...

Documents